Nanjing Decade (1928-1937)

Transport

Transport

Politics Driving Technological Development

Transport

Airways

Roadways

Railways

• The National Highway Planning Commission (est. 1929) was responsible for roadways.
• Maintenance and import of automotive equipment also increased.

Sun Yat Sen’s Vision

• The China National Aviation Corporation (CNAC, est. 1930) (55% Chinese government and 45% American partnership)
• Initially used slow single-motored Loening amphibian planes (Max. speed 100 mph), stinson single motored land planes and dolphin amphibians . In 1935, advanced Douglas DC-2’s were added to the fleet.
• The Euroasia Aviation Corporation (EAC, est. 1931) (set up with an agreement with the German Lufthansa). Operations were on a smaller scale than CNAC.
• The EAC first used single motored junker planes and then three-motored junker planes.
• Advancements provided with cheap and fast airmail and also brought distant regions into closer contact which promoted economic, political and national solidarity.

• Nationalist Government came to power in 1927 with a “Specialist” and “Internationalist” approach.

• Focused on 3 main objectives:
• Complete National Reunification
• Reassert Chinese Political and Economic Sovereignty
• Rapidly Industrialize the Nation

• National Resources Commission (NRC), China's first technocratic civil service was established.

• Started out as a secret organization called National Defense Planning Commission (1932) consisting of 50 technical experts

• Designed and implemented defense-related industries

• Renamed in 1935 to NRC, focus changed to a bureaucracy that managed state-owned industrial sectors

• The railways were a mess in 1928. Warlords interrupted service, used lines for military purposes and seized revenues.
• The improvement of railway operations and a expansion were a must.
• Sun Fo (Sun Yatsen’s son) set up a separate Railway Ministry.
• Great pressure lead to the expansion of lines as it was a political necessity. There was also considerable provincial initiative as well as substantial foreign investment.
• Sections with older light 35-pound rails were replaced by heavier 63-pound ones to maintain uniformity.
• Many parts of china were connected and roughly a 47% increase was seen.
• About ⅔ of mineral products were transported by rail.

• Sun Yat Sen lead the 1911 revolution

• Chief figure in the revived Guomindang

• Established a technological blueprint for the Nationalist Party. It emphasized on 3 main ideas:

• Role of State Planning
• Foreign Capital Investment and
• Development of Basic Heavy Industries and Infrastructure for e.g. Ports, Railways, Utilities etc.

Sun Fo (left) & Sun Yat Sen (right)

Sun Yet Sen (1866 -1925)

Conflict within the government

Utilities

Architecture and Education

Architecture and Education

Match Industry

Chiang was facing opposition from within his government by some influential leftist warlords.

• American building technology influenced construction with the use of steel frames and reinforced concrete proving highly economical and malleable,

• For e.g., Sun Company Headquarters in Shanghai (1936) had a multi story art deco and the The Bank of China Building in Shanghai (1936) was made by foreign influenced architecture.

• Many projects in the decade initiated ambitious technological development projects supported by international aid.

• First establishment was Chuch’ang Match Company in Chungking in 1889.

• Industries later grew in Hankow, Changsha and Shanghai.

• During 1927, the Chinese market was practically taken over by Swedish products.

• Repeated boycotts of foreign goods and a 40% import tariff.

• This caused Chinese establishments to increase steadily, by 1929 there were 185 chinese-owned match companies.

• The domestic output of matches experienced a continuous rise from 1912-1936.

• The Nationalists made strides in science, technology and education

• Established American style universities and also the Academia Sinica

• Introduced architectural programs in 1930 at National Central University in Nanjing and Peking University.

• 35/55 members in the Society of Chinese Architects were American-educated in 1935

• Foreign firms such as Palmer and Turner and foreign educational institutions such as: Tsinghua College in Beijing significantly increased foreign influence on secondary and tertiary education

• By 1930’s universities had Chinese faculty members who trained in the US, UK, Germany and France.

Political instability

Utilities

Example

Machinery Industry

Paper Industry

Cigarette Industry

Zhongxing Coal Mining

Company

Chiang was facing opposition from The Communist party, invasion from Japan and internal national disputes

In 1929, Chiang called for the reduction of army and military spending with support from other lawmakers

It resulted in lawmakers starting a civil war against Chiang

• In 1932, the Handicraft paper production was a whopping 360,000 tonnes whereas the combined factory production of paper and cardboard was only 37,000 tonnes.

• After this period mechanisation of the paper industry started increasing and nearly tripled from 1931 to 1936. This was a huge leap in mechanisation of paper production.

• Development was seen but due to the huge demand there was still a need for foreign imports.

Government Type

• Development depended heavily on other industries, chiefly textiles, flour and rice milling, and a silk reeling.

• After WWI the supply of foreign machinery was cut off.

• There was expansion in the consumer goods industry. The demand for domestically made machinery increased.

• This huge leap in mechanisation led to the development of the chemical, machinery, coal and paper industry.

• The company improved relations to their advantage with the Warlords.

• Upon the Nationalists coming to power, these advantages turned into outright disadvantages as they implemented their anti-warlord policies.

• The mine was nearly closed and production fell till 1928.

• Established a new management team in 1928.

• Qian Yongming (a board member) had good relations with the Nationalists and banks.

• He helped get the mine back into a booming business and profits skyrocketed.

• Manufacturing began in 1902 with the establishment of British, American and Pei-yang Tobacco company.

• Nanyang Brothers Tobacco Company, a leading Chinese-owned cigarette manufacturer set up in Hong Kong in 1906.

• Expanded in North China and the output increased from 4,759 cases in 1912 to 33,825 cases of cigarettes in 1917.

• Similar growth was observed in other smaller companies.

• Boycott of British goods in 1925 leading to a decrease in imports.
• Domestic production increased, it is evident from the following table which shows increasing tobacco leaf imports after the boycott.

Nationalist rule led by the Kuomintang National Congress (KMT), the president of which was Chiang Kai-Shek

According to Lloyd Eastman, Chiang's rule was hanging between totalitarian and democratic.

He appointed his supporters into prime positions

Technological Developments in the Nanjing Decade

• 1929-1933: series of civil wars

• resulted in mass casualties and destruction

Influential and high-ranking positions in the party and government, educational agencies, youth organisations, trade unions and one of Chiang's secret police organizations were given to supporters

• underestimated Japan

• Under Chiang's government, scholars and bureaucrats wrote new laws and regulations
• An effective system of budgets and accounts was established
• Tariffs were set up

Tariff controls

Social Legislation

• Introduction of a Western-oriented educational system
• New Life Movement
• Laws that promoted the rights of women
• Rural Reconstruction Movement
• Movement to revive the Chinese countryside

Banking and Currency System Reform

• In 1929, government regained the right to set its tariff
• Asserted its right to receive the entire proceeds of customs revenue.
• Major step towards fiscal centralization.
• Higher tariff rates = Major boost to the finances of the new govt.
• 1924-1928 = C$121 million yearly
• 1929 = C$244 million
• 1930 = C$290 million
• 1931 = C$385 million

Corruption

The Nanjing Decade and the Subsequent Rise in Industrialization

KMT practiced political tutelage and led a one-party dominance over China

• Bribery
• Extortion
• "Skimming"

• Instituted the fiat currency (fapi) reform
• Banking system revamped
• Industrial loans
• Tripled loans and loan assets
• Average paid up capital more than doubled
• Several banking consortium to finance railway and other major projects
• Banks began to offer loans to rural areas where peasants were yearning for financial help

CCCH9021

Chinese Business Practice and Society: Past and Present

Agricultural Reforms

Employment Legislation

Cross-province Trading Tax

Aditya Pratap Gupta 3035240128

Apoorva Katta 3035123617

Siddharth A. Agrawal 2013515705

Vishnu Chopra 3035239739

Preya Shah 3035275771

Nitin Pendkar 3035124180

Davy Sharma 3035124697

Kanak Kabara 3035164221

• Likin tax: Taxes on goods in transit; collected at about 700 barriers on main trade routes by land and water
• Was originally 1% but became subject to arbitrary arrangements = gave rise to corruption
• Grave obstruction to trade and costly to operate
• Large revenue but none of it was going to the national revenue

• Keeping Sun Yat Sen’s thinking in mind the government made some reforms
• They improved the land law in 1930 where the rent was limited to 37.5% of the total produce .
• Development of a system of crop report and statistics
• The Agricultural Research Bureau developed in thirties improved varieties of rice, wheat,cotton, corn and potatoes

• Labor Code written in 1927 – ultimate aim to enforce the Three People’s Principles.
• Stipulated an eight-hour work day, a large number of public holidays (175 days per year!), a high wage level and social insurance.
• Performed poorly as they were very expensive to maintain

Downfall of the KMT

Chiang won the civil wars and became an Allied Power but the circumstances, aother civil war broke out against the Communists

• The Nationalists lost the war and control over China

Tax Policy

RAILWAYS

RAILWAYS

• 400 miles of line were built between Yellow River and Peiping-Suiyuan Railway in the North.

• 500 miles of line were added in Chekiang and Kiangsi provinces.

• A total of about C$100 million were expended on the expansion of railways, and a total of 2328 miles were added to the railways, which was a 47% increase.

THE ECONOMY

• China's railways as of 1927 were mainly built by funds from foreign countries during the international scuffle for concessions from the late 1890's to WW1.

• On the eve of the Nationalist Takeover, China has 7683 miles of railway lines.

• This was a tiny number considering the size of the nation and of course the population.

• Transport of goods was taking place through inefficient means like waterways, and human effort.

RAILWAYS

INTERNATIONAL TRADE

• Hence, there was progress in the railway services.

• Total operating revenue grew by C$71 million between 1935-6.

• Freight ton-kilometres grew by 66% between 1931-6.

• Operating ratios improved by 2.8% between 1927-1936.

• Due to a great amount of pressure because of economic and strategic reasons, there was major improvement in the meagre railway network.

INDUSTRY

RAILWAYS

• This was of course, greatly due to the world wide economic depression in this period.

• Changes further took place after the value of the Chinese currency sharply rose, and again immediately decreased after 1931.

• Clearly the foreign market was very volatile in this period.

• China's main activities in foreign trade consisted mainly of funding the Bank of China, which was setting up branches in metropolitan cities worldwide.

• There was also a lot of government trading, such as through the China Vegetable Oil Corporation, the China Silk Corporation, and the barter trade with Germany (1935-7).

• Industry only contributed to 10% of the total GDP of china .

• Foreign investment played important role in the growth of industries.

• Industry grew at a healthy rate of 6.7% much more than the previous decades.

• The value added index of the country doubled where as it fell for the other big economies.

• Handicrafts formed the most important industry but slowly it was also getting modernized.

• Major industries were mining& metallurgy, manufacturing(cotton yarn, cotton cloth, cement) and fuel& power.

• There was a great need for better transport, hence railways were profitable.

• The new government and Sun Yat-sen's son Sun Fo set up a new Railway Ministry.

• Still, due to interruptions by warlords, the conditions were unfavourable for expansion.

• However, China had greatly experienced railway personnel, and the railways had been made financially autonomous by the early 1930s.

Introduction

SOCIAL

INTERNATIONAL TRADE

• Foreign trade was the lowest per capita for any important country.
• Currency standards were different causing havoc.
• Soon after coming various steps were taken by the government and they came to be known as the ‘First Measures’

INTERNATIONAL TRADE

• Prior to Nanjing Decade the economy of China was in a miserable state.

• From 1921-27 debts amounted to 600 million US$.

• Roads and Railways hardly existed.

• The nationalists government took over an economy where all internal debt was in default

Three People's Principles

Virtues to Industrialization

• Imports included raw materials, foodstuffs and many kinds of manufactures.

• Net imports of captial goods in China grew from around C $ 108 million in 1932 to C $ 144 million in 1936.

• Imports of railway and communications equipment grew by C$35 million.

• Vehicle parts by C$ 23 million, electrical equipment by C$ 5 million, and misc. Machinery by C$18 million.

• Exports comprised mainly agricultural products.

• Other exports were minerals, fabricated goods and foodstuffs.

• Fibres, oil seeds, tea, hides, skins, and leather were other agricultural exports.

• Foreign trade was a major factor in promoting China's modernization.

• Foreign trade per capita was extremely low – Roughly US$2-2.5.

• Around the depression period from 1932-6, it dropped to US$ 1.

• A lot of discrepencies and losses were caused due to the uncontrolled amount of smuggling which took place in this period.

• In the Nanjing decade, the total foreign trade index for China dropped majorly.

• In the 1920s the index was 100, and by the 30s, it had reached nearly a third of this index.

Virtues of people wanting to work hard made China an attractive labor market.

This greatly helped the industries pre-established in the region and gave high motivation for other to follow.

Such steps that led to an increase in industrialization during this decade.

Changes during the Nanjing decade were reflected in the society as well.

Fascism was on a rise in the hopes of overriding the class divide, but required trust in one leader,

Neo-Confucian properties of propriety, duty, honesty, sense of shame were emphasized.

Chiang wished to improve the customs of the Chinese people and wished imbibe these virtues in the business culture as well.

Changes during the Nanjing decade were reflected in the society as well.

Increasing foreign influence led to a rise in Fascism in the hopes to override the possibility of a class divide.

Three People’s Principles emphasized on the Neo-Confucian properties of propriety, duty, honesty, sense of shame.

Chiang wished to imbibe these virtues in the business culture as well.

Agricultural Background

Currency Reforms

• Note issue of the governments bank grew from 488 million chinese$ on November 2 1935 to 1,680 million chinese$ on June 30 1937.
• Only during the year 1936 total deposits grew by 759 million chinese

• The currency of China was initially silver-backed, but the nationalist government seized control of private banks in the notorious banking coup of 1935.
• Currency was replaced with the Fabi, a fiat currency issued by the ROC.
• Credit became more readily available

• Agriculture produced about 65 percent of the net domestic product and employed the vast majority of Chinese.
• Agriculture received nothing from the prior governments although it formed the major source of revenue and supported the armies.
• Only 10% of total rural credit was provided by modern and native banks in 1933. The rest was provided by landlords or moneylenders at a very high interest rate.
• Land taxes were very high and rural debt was a serious problem especially during acute deflation from 1931-1935.
• The early years saw some serious drought-famine situation . The nanjing decade got off to a very poor start economically
• Sun Yat Sen goal-”Each tiller of the soil will possess his own field”.

New Life Movement

• Provinces like kwantung , szechwan and kwangsi had a history of monetary instability
• A central bank was estabilished in szechwan
• By 1937 definitive currency reform could be taken into South China region
• These measures of currency unifactions formed a major part of the government of unifying China politically and economically.

Started in 1934 by Chiang Kai Shek, this aimed to apply these virtues in regular life.

Chiang wanted people to stop being “lazy” and take up jobs and a work attitude, the people complained that were simply not enough jobs available.

Chiang wanted the virtues of people to improve before setting up the infrastructure reflecting the chaos at that point in society.